The Great Divide: Should You Buy A Single-Family House Or A Condo?

Buyer

August 30, 2019

For many first-time home buyers, it could be a real struggle to decide which type of residence is best to purchase. You may find yourself debating whether to buy your “dream house”, or own a condo unit and enjoy its inclusive perks and amenities. Too bad there is no such thing as a “one size fits all” when it comes to any of these two home options.

While detached single-family homes continue to be the most common home type for many buyers (83% in the 2017 NAR Report), there are still those who choose to buy condos or townhomes. According to the National Association of Realtors 2018 Home Buyer and Seller Generational Trends study, a detached single-family home is the primary type of property purchased by most Gen X and millennial buyers. Meanwhile, at least two percent of millennial buyers bought a condo over the past year.

Aside from price, here are the key factors and considerations you need to discuss when contemplating which type of residence you should purchase:

1. Location and your lifestyle

In the question of whether you should buy a single-family house or a condo also comes another dilemma: choosing between suburban or city/urban living. If you love city living and also enjoy the nightlife, there's no doubt that a condo suits you. But it also depends if you are willing to sacrifice space over lifestyle and convenient location, especially if you want to be within walking distance of cinemas, restaurants, malls and shops, and other activities that can be found in large metro areas. It’s a common situation that is applicable to many young professionals and newlywed couples.

But if having extra bedrooms, bathrooms, and a big yard have more appeal to you, buying a home that is commonly located in the suburbs is likely your best choice.

2. Space and privacy

You might want to evaluate how much square footage and storage space you will need in the next three to five years. A two-bedroom condo might work great if you're only living by yourself or with your significant other. But if you’re looking to grow your family in the next few years, a house will be a great purchase since it will offer more room for storage and other stuff, especially if kids will be in the picture. Condo developments may have shared storage units, but you will have to deal with the limited space.

However, despite the lack of private space, most condos provide neighborhood amenities such as a pool, gym and jogging paths, recreation centers, among others. Purchasing a condo is a good choice if you can overlook the limited storage space to enjoy such amenities.

Aside from the limited storage space, privacy can be compromised. Sounds can travel through shared walls, floors, and ceilings in a development. So choosing between a single-family house or a condo may also depend on the amount of privacy you want. Consider whether you don’t mind the possibility of being overheard or hearing your neighbors having a heated argument, or if you like it better when it’s more peaceful and quiet.

3. Home maintenance

For many first-time home buyers, handling the upkeep of a single-family home can be very overwhelming. This is also one of the main reasons why many aspiring homeowners are seeing condominiums as an attractive option. They are often newer and the HOA usually hires contractors to handle maintenance and other responsibilities such as landscaping, lawn maintenance, and snow plowing. You will just have to share the costs with all homeowners in the development. Condos are also a convenient option for those who are too busy with work and other activities, as well as those who travel a lot. You can save time and effort in exchange for paying HOA fees (which will be discussed later).

If you're looking to buy a single-family home, consider whether you will have the time and ability to take care of the yard, mend the fence, clean the gutters, and handle other responsibilities. Or else, you will have to hire a contractor to do those things for you. Those tasks (and costs!) can be very daunting, especially if you’re a first-time homeowner.

4. Pets

It's important to factor in your pets in your home purchase, especially if you consider their welfare. If you’re one of the many pet owners who dreams of having a home with bigger backyard for Fido or any of their furbabies, there’s no way you wouldn’t go for a single-family house. Still, remember that each city has its own local pet laws and restrictions. When it comes to condos, HOA commonly impose strict rules and permits around pets. Whether you choose a home or a condo, do your research to determine how you’ll be limited or restricted when it comes to pets.

5. Parking

Parking can be a major dilemma if the building or development doesn't have a designated garage or if their parking areas are on a first-come-first-serve basis. Some developments also offer exclusive parking for residents for an extra fee. If you prefer to have a private garage to shelter your vehicle, a single-family house better suits you. However, if it’s no big deal for you to park in an open area or an underground structure, a condo might do.

6. HOA fees and rules

While many condo developments are governed by a homeowners association, there are also single-family homes that are within the jurisdiction of an HOA (depending on the city or location). So aside from the monthly mortgage payments, you may also have to pay for association fees or “membership dues” that could go towards overall maintenance and repairs.
However, some people opt to buy a single-family home because they may find an HOA to be too restrictive. HOAs can limit guest stays, impose strict pet rules, tell residents where to park and limit the type and number of vehicles they can have on the property.

7. Independence and control

And speaking of restrictions, there's no denying that single-family homeowners have more control over their properties. They can renovate their homes whenever and however they like. They can paint their walls and exterior in any color and add any features they like—something that can’t be done by many condo owners. You may need consent or permission from the association before you can do any changes to your condo.

8. Home loan and the type of mortgage you'd get

If you’re planning to put less than 20% down payment on your home purchase, keep in mind that most government-backed loans and programs (such as an FHA or USDA loans) only approve loans for single-family homes. When it comes to purchasing a condo unit, it can be quite difficult to find a condo development or a condo community that is FHA-approved. FHA loans for condos are available and insured through the FHA Section 234(c). Likewise, there are specific restrictions for the development to be approved for the loans. Also, note that lenders usually charge higher interest rates for a condo purchase compared to what they charge for single-family homes.

Bottom Line

Regardless of what type of dwelling you choose to purchase, it's important to do your research on the pros and cons, as well as the costs that may come on top of mortgage and taxes. Aside from the given considerations, there is nothing more important than your comfort and happiness. Will you be happier spending your days in a single-family home in the quiet suburbs? Or do you prefer the convenience of living in a condo, which is mostly within walking distance of many urban hot spots? Whatever you choose, don’t settle for something that you will likely regret and won’t find yourself enjoying.